Chris Nicholls
Last July, a judge put the Department of Labor's new Retirement Security Rule, which was set to go into effect last September, on hold, and it seemed likely it would remain there until after the presidential election.
Now, it will remain on hold a bit longer, as the Department of Labor filed a motion on Feb. 11 in the U.S. 5th Circuit Court of Appeals to hold its appeals in two court cases about the DOL’s fiduciary rule, saying the new administration and agency officials need time to onboard and familiarize themselves with the cases.
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DOL’s hold on the fiduciary rule in 2024 had followed two federal court stays last July, which were put in place in an effort to delay implementation of the new fiduciary rule, which has been beset by lawsuits and Congressional efforts.
The new rule, which is the DOL's latest attempt to extend fiduciary responsibilities to annuity sales, has hit legal roadblocks from the get-go filed by industry firms and member trade groups, including the American Council of Life Insurers and the Federation of Americans for Consumer Choice.
Under the Biden administration, the DOL had filed notices of appeal in the fall of 2024 in the two federal court rulings that stayed the implementation of the new fiduciary rule.
Under the new Trump administration, the DOL wants “to allow new DOL officials sufficient time to become familiar with the issues in these cases and determine how they wish to proceed,” the DOL’s motion states. However, the DOL is requesting status reports due at 60-day intervals.”
Related: DOL attempts to un-freeze its new fiduciary rule, filing 2 appeals in federal courts
The new fiduciary rule essentially expanded the definition of fiduciary under ERISA to include annuity sales, regulating that advisors act in the best interests of clients. However, last fall, Sen. Elizabeth Warren released a report identifying that at least 29 annuity and insurance companies are offering agents perks – vacations and cash bonuses –"in exchange for the agents to sell their annuity and insurance products," said her “Cancun, Cruises and Cash: How the Department of Labor's New Retirement Security Rule Would End Insurance Industry Kickbacks that Cost Savers Billions” report.
The American Council of Life Insurers and the Federation of Americans for Consumer Choice “do not oppose the motion,” according to the motion.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
